I have no pension, but I own my own home with no mortgage. I also have quite alot of cash in the bank. If I get a financial advisor to invest this for income for me, with index linked investments (so that the capital goes up with inflation) and I want to retire on an income of, say, £15000 per year before tax in today's terms, how much cash do I need in the bank to generate this income, which would enable me to retire and live a life of leisure?
I am 35 years old.
Thanks
2007-05-25 12:23:18 · 8 answers · asked by Anonymous in Business & Finance ➔ Personal Finance
In retirement, you will want to take minimal risk with your money (you won't necessarilly have 35 more years to recover from any market dips), so the smartest place for it to be then is a bond fund where you can reasonable expect to earn 4.5% on average, long term. To earn that, you need to have saved up (£15000/4.5)X100, which is about £333,300...
Between now and then, you can afford to invest quite aggressively, so if you chose an aggressive growth mutual fund earning 9-12%, you could grow £333,300 over the next 35 years either by investing £20,000 today, or by making annual investments of about £1,400 a year, or £27/week
2007-05-25 12:51:07 · answer #1 · answered by Anonymous · 0⤊ 0⤋
I'm not sure if the pensions area in the UK is different but in Ireland to purchase a pension of 15000 you would need a fund of approx 300,000 at retirement. Also if you invested for the purpose of funding a pension any growth would be tax free and you could get tax relief on the initial investment. Hope this helps - obviously check out the differences with the UK pension system with your financial advisor
2007-05-25 12:32:46 · answer #2 · answered by Loislane801 3 · 1⤊ 0⤋
I don't know what type of return you can earn on your money, but the US stock market has a long term average return of about 12%. If you allow for inflation, you should be able to draw about 8% and still keep up. That means you would need around 12.5 times the amount you wish to take out each year. Even if these numbers are off, it should give you an idea how to calculate what you may need.
2007-05-25 12:39:30 · answer #3 · answered by STEVEN F 7 · 0⤊ 0⤋
Consider moving to somewhere like Romania when you retire and you can live comfortably...as a a rich man..on £10,000 a year....eat in 5star restaurants etc etc.........Buy property for a pittance...check it out now.......Buy a house there now and plan for a future there...learn the language etc.
Best wishes, Mike.
2007-05-25 12:31:43 · answer #4 · answered by georgiansilver 4 · 1⤊ 0⤋
at about 4% per anum interest you would need about £400,000 in the bank to allow for tax that would give you about £15,000 / anum.
better start saving
2007-05-25 12:30:11 · answer #5 · answered by McCanns are guilty 7 · 0⤊ 0⤋
About £175,000 on a 10% interest gig
2007-05-25 12:28:36 · answer #6 · answered by Anonymous · 0⤊ 0⤋
im not sure on all the numbers but i would say at least 150,000 plus would be a good number 2 retire on
2007-05-25 12:44:28 · answer #7 · answered by demonslayer9999 1 · 0⤊ 1⤋
ha ha ha ha oh dear
my life !
2007-05-25 12:33:49 · answer #8 · answered by wonderingstar 6 · 0⤊ 4⤋